Nike, Foot Locker can’t rely on sneaker geeks

MarekFuchs

Columnist

Getty Images

Nike Air Jordan sneakers

As Nike prepares to release its fourth-quarter results after the stock market closes today, the media are casting their memory back to the 1980s, when the fashion trapping of the moment was the sneaker.

There was soon a (count ’em) two-part New York Times spread trumpeting the trend. “The Sneaker Comes of Age” claimed the sneaker had “undergone a fashion baptism” and “Tips From Fashion Insiders on How to Wear Sneakers With a Suit” posited that sneakers are becoming “the purse” of manhood. But inquiring minds needed to know even more about sneakers at work, so in yet another dispatch from the sneaker front, The Times went one further, saying men were not only wearing tons of sneakers, but also decorating them.

There is only one small problem with all this heady talk about smelly accessories: It might be a total hunk of nonsense.

Granted, it doesn’t take a huge leap of the imaginative faith to believe that sneakers might be the next, well, sneakers. There was a time where everyone from Michael J. Fox to Michael Jackson were wearing the things. People probably even wore them to work. At any rate, Apple’s
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Steve Jobs did; it could happen again, for a time. Fashions do exist.

At the same time, it is hard — if not downright impossible — to lay bare fashion claims. Out of the 1,423 fashion stories declaring the advent of trends written in the past year, at least one or two will probably prove to be true.

The majority, though, might as well have been written in lemon ink.

In 2012 alone, The New York Times told us that “consumers are gravitating” to bird-poop facials and, even in terms of footwear, claimed that the fashion elite were dressing for work but wearing bedroom slippers, a practice, said The Times, that we are starting to “see all the time.”

If you are currently enjoying weekly bird-poop facial — or are Vincent “The Chin” Gigante — my sincerest apologies for doubting the authenticity of such trend stories.

Fashion can be real, though, at least on the odd occasion. Problem is, for those who work in the cold hard world of numbers (i.e. every traders since dinosaurs roamed the corner of Wall and Broad) how exactly do you calculate and translate fashion? Little gets traders into more trouble than words lacking a foundation of numbers. Hunches hitched to a few anecdotes lead to financial doom.

So here’s what we know about Nike
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for certain and, more to the point, the several items that can snag you:

Analysts are, according to FactSet, expecting Nike to earn 75 cents a share versus 76 cents a year earlier. Revenues are pegged at $7.34 billion, up from $6.7 billion. Top and bottom line are headed in different directions because Nike is spending shovelfuls on World Cup marketing. On that note, The World Cup — its cost and possible payoffs — will be overlooked if the sneaker trend keeps gaining traction. Do your best to separate out these two variables.

Moreover, even if an argument can be made that there is at least a degree of truth to the claim that sneakers have become a bit of a fashion “do,” beware of timing. Even when the trends are legitimate, the media almost always catch them late. Don’t confuse the media’s realization of the trend with its start date.

This is particularly important, because while the media operate in its own wrinkle in time, stocks run strictly on year-over-year comparisons. The media started their obsession with sneakers in the spring, after Foot Locker reported and — no surprise — as the news cycle slowed. But workers could have been wearing the same amount of sneakers to work in last year’s fourth quarter.

Also, the media’s assumption, almost without fail, is that any move toward wearing fashionable sneakers to work will benefit the traditional sneaker manufacturer like Nike. Problem is, a lot of fashion companies are tumbling into the sneaker game, hoping to take a piece of the high-end sneaker business. Houses of high fashion are suddenly peddling sneakers. There is as much as chance that this trend toward designer sneakers worn to work, if it even exists, can hurt Nike as much as help.

Lastly, even when valid, fashion is as fleeting as parachute pants. Worse, companies that build out to accommodate a turn in fashion are often left with higher capacity costs once the fashion goes the way of LA Gear, the ’80s era sneaker high-flyer, famous for its gaudy colors and tendency to fall to pieces three steps into a run.

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